‘Accountable Care’ Helping Hospitals Keep Medical Costs Down

Nathan Weber for The New York Times

Noraine Scarpelli, at an Advocate Health Care hospital.

CHICAGO — On a stormy evening this spring, nurses at Dr. Gary Stuck's family practice were on the phone with patients with heart ailments, asking them not to shovel snow. The idea was to keep them out of the hospital, and that effort — combined with dozens more like it — is starting to make a difference: across the city, doctors are providing less, but not worse, health care.

Nathan Weber for The New York Times

Dr. Karen O'Mara monitoring intensive care patients, ready to alert a doctor if they need help.

For most health care providers, that would be cause for alarm. But not for Advocate Health Care, based in Oak Brook, Ill., a pioneer in an approach known as "accountable care" that offers financial incentives for doctors and hospitals to cut costs rather than funnel patients through an ever-greater volume of costly medical services. Under the agreement, hospital admissions are down 6 percent. Days spent in the hospital are down nearly 9 percent. The average length of a stay has declined, and many other measures show doctors providing less care, too.

This approach is one small part of a growing effort by providers to hold down costs without restricting needed care. Nationwide, health care spending has grown over the last three years at the slowest rate since the federal government started keeping data more than 50 years ago. While the bulk of that is related to the poor economy, changes among insurers and health care providers have contributed as well. If the trend continues, even at a reduced pace, it could help alleviate Washington's long-term deficit problems and ease the strain on family budgets.

"The part that's not driven by the economy, that's the part we can theoretically control," said Drew Altman, president of the Henry J. Kaiser Family Foundation. "If we can shave even a small percentage off of it, it has a huge impact on public programs, a huge impact on premiums, a huge impact on employers."

But even as more health systems seek to replicate Advocate's early success, its experience shows just how hard it may be to expand the approach and keep medical costs from resuming their relentless rise.

"It's hard to imagine that you could start from scratch and do this and be successful in three years, said Dr. Lee Sacks, Advocate's chief medical officer, noting that other systems may find it far harder to flip the traditional fee-for-services system on its head. "We had a running head-start going back to 1995."

Nonetheless, the Affordable Care Act, President Obama's health care law, has helped encourage a shift to Advocate's payment model. Such agreements were merely a theory four years ago. But an estimated 428 accountable-care organizations now cover four million Medicare enrollees and millions more people with private insurance.

Under Advocate's deal with Blue Cross Blue Shield, certain patients are assigned to the accountable care framework — about 380,000 — and their health costs are projected. If Advocate achieves savings below that amount while meeting explicit quality targets, it splits the money with the insurer. If not, its revenue is at risk.

In some ways, accountable care resembles earlier efforts to control medical spending, including the health maintenance organizations that proliferated in the 1980s but fell out of favor, in part because they severely limited patients' choices. But accountable care differs by giving doctors and hospitals a direct financial stake in saving money and a reason to invest in various programs of preventive care rather than relying exclusively on the fees they would normally earn from providing services.

"There's an enormous amount at stake in getting these reforms to work," said Alan Krueger, the chairman of President Obama's Council of Economic Advisers.

To help control costs, Advocate has hired scores of workers to coordinate care and keep an eye on the highest-cost patients, like those who are obese or have diabetes. It started providing doctors' offices with report cards on their performance. Dozens of quality-control measures cover items as varied as blood pressure, rehospitalizations for asthma attacks or the use of expensive imaging machines.

On a blustery spring morning, those changes were visible in Advocate care centers across the metropolitan area. Sumera Khan, a clinical pharmacy specialist, popped into the hospital room of Noraine Scarpelli, an elderly woman with congestive heart failure, to check her prescription drug levels, an additional level of scrutiny that can help prevent complications. In another building, Dr. Karen O'Mara flicked between eight computer screens, peering at intensive care patients miles away, ready to alert a doctor if they looked in distress.

Advocate, a faith-based nonprofit, has an advantage over other health systems just jumping into what is more broadly known as "value-based care." In the late 1990s, well before it forged its contract with Blue Cross Blue Shield, Advocate began taking steps to control costs and improve quality. A decade ago it adopted a "clinical integration" program, requiring doctors to work together on patients in common. It was also a pioneer in the use of electronic health records.

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